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119-s-4287119th CongressWALLET

GRATS Act

Sponsored By: Senator Wyden, Ron [D-OR]

Introduced

Summary

This bill would focus on reducing abuse of grantor retained annuity trusts by imposing stricter rules on GRATs and changing how transfers and trust-paid taxes are taxed. It targets common valuation and transfer techniques that shift wealth free of gift tax and capital gains tax.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 0 benefits, 3 costs, 0 mixed.

Stricter rules for GRATs

If enacted, the bill would make many grantor retained annuity trusts (GRATs harder to use). A GRAT annuity term would have to run at least 15 years and no more than the annuitant's life expectancy plus 10 years. Annual payments would have to be fixed and could not decrease during the term. The remainder interest at transfer must be at least the greater of 25% of the property's fair market value or $500,000 and cannot exceed the property's value. These rules would apply to trusts created on or after enactment and to portions funded after enactment.

Treat trust-owner transfers as sales

If enacted, the bill would treat transfers of property for consideration between a grantor trust and its deemed owner as a sale or exchange for tax purposes. That includes in-kind satisfaction of an annuity or discharge of debt by the trust. The rule would not apply to grantor trusts fully revocable by the owner, to asset-backed securities trusts, or to trusts the Treasury excludes by rule. The bill would also treat the grantor trust and its deemed owner as related taxpayers and defines both 'asset-backed securities trust' and 'deemed owner'. These changes would apply to transfers made after enactment.

Trust tax payments treated as gifts

If enacted, the bill would treat income taxes a deemed owner pays on an applicable grantor trust as a taxable gift by that person for the calendar year. Taxes reimbursed by the trust during the same calendar year would not be treated as gifts. The gift date would be the earlier of December 31 of that year, the day before the person's death, or the date the person renounces reimbursement rights. The bill would also deny any deduction under sections 2522 or 2523 for amounts treated as gifts. These rules would apply to trusts created on or after enactment.

Sponsors & CoSponsors

Sponsor

Wyden, Ron [D-OR]

OR • D

Cosponsors

  • Sen. King, Angus S., Jr. [I-ME]

    ME • I

    Sponsored 4/14/2026

Roll Call Votes

No roll call votes available for this bill.

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